Back when Gov. Jerry Brown submitted his first budget proposal in January 1975, I was working toward my accounting degree at Cal State Long Beach. As he submitted his 16th and final budget proposal Wednesday, for fiscal year 2018-19, I was thinking what a long, strange trip it’s been for both of us.

Although the governor is a lawyer and I’m a CPA, we both are “numbers guys” who like to get into the nitty gritty in the back pages and dig into the weeds.

Looking at his proposed budget details, here are four good and four bad things:

Good: The budget acknowledges that, despite some pension reforms, “California’s unfunded liabilities continue to rise” because “poor investment returns and the adoption of more realistic assumptions related to future investment earnings and demographics have grown the state’s retiree long-term costs, debts and liabilities to $272 billion.” Unlike other numbers, the governor commendably also mentions the $76.7 billion in retiree medical liabilities.

Bad: The budget includes spending of $6.2 billion for contributions to CalPERS and $3.1 billion for CalSTRS; these contribution amounts were minuscule 20 years ago before pension spiking. That’s $9.3 billion that could have gone to pay for more teachers, cut college tuition, build roads — or be refunded to taxpayers. Even worse: Brown kicks any real pension solutions into the future when he’ll be gone.

Good: In his press conference, the governor again warned the current prosperity will not last forever and “it’s important to prepare” for the next recession. With an appropriate supplemental payment of $3.5 billion, the budget fills the “Rainy Day Fund” all the way to the constitutional Proposition 2 requirement of $13.5 billion which voters passed in 2014.

Bad: As the governor noted, a recession likely would mean $20 billion in yearly deficits. In three years, that would equal $60 billion. That could mean $46.5 billion in cuts. What’s needed is for the Legislature, on its own, to start saving more toward that higher amount.

Good: The budget’s general fund spending would only rise by 4.1 percent, to $131.7 billion.

Bad: Over the last eight years, spending increases total 52.4 percent since Brown’s budget of just $86.4 billion for 2011-12. That’s way above the original spirit of the Gann Limit of 1979, which the governor supported, capping spending at the increase in population plus inflation.

According to the U.S. Census Bureau, California’s population has grown 5 percent the last eight years; while the Bureau of Labor Statistics’ online calculator figures the Consumer Price Index rose 12 percent. Total: 17 percent. That indicates Brown’s own spending increases couldn’t be sustained in a recession.

Good: No tuition increases for Cal State and UC students, making tuition, adjusted for inflation, below 2011 levels.

Bad: Unfortunately, this does not address the administrative bloat detailed in an April 2017 audit by State Auditor Elaine M. Howle, CPA. Cutting administrative waste would enable lower tuition and higher faculty pay.

Good: Funding for K-12 schools will have grown to $78.2 billion, up from $47.3 billion in 2011-12. That’s a 65 percent increase in seven years. The governor’s Local Funding Formula, which shifts money to support English learners, and students in foster care, and low-income families, is now fully funded.

Bad: Student test scores continue to languish among the bottom of the states, as the teachers’ unions thwart needed reforms, such as performance pay for teachers.

Finally, Brown’s budget numbers were calculated before the federal tax bill passed last month. It concedes some parts of the bill could “temporarily” benefit the economy, yet warns, “millions of Californians will be hurt” because of limits on deducting state and local taxes on federal tax returns. Consequently, this matter will be addressed further in the May Revision.

What’s missing? A priority on reducing California’s $168.5 billion unrestricted net deficit. The state may have a balanced budget, but its balance sheet is the worst in the nation.

Our next governor will have plenty to do. Let’s hope the “Trump Bump” continues for a few more years, as Brown’s predicted future recession will not be pleasant.

Sen. John Moorlach, R-Costa Mesa, represents the 37th District in the California Senate.

Join the Conversation

We invite you to use our commenting platform to engage in insightful conversations about issues in our community. Although we do not pre-screen comments, we reserve the right at all times to remove any information or materials that are unlawful, threatening, abusive, libelous, defamatory, obscene, vulgar, pornographic, profane, indecent or otherwise objectionable to us, and to disclose any information necessary to satisfy the law, regulation, or government request. We might permanently block any user who abuses these conditions.

If you see comments that you find offensive, please use the “Flag as Inappropriate” feature by hovering over the right side of the post, and pulling down on the arrow that appears. Or, contact our editors by emailing moderator@scng.com.